MarketWatch's top stories of the week

For a while this week, the market was just background noise. Yes, for a few hours during the inauguration of President Barack Obama, the painful pounding of the stock market faded while the nation celebrated another peaceful transfer of power.

But it wasn't long before the respite, if that's what it was, ended. While Chief Justice John Roberts was leading Obama to flub the oath of Office, the market tanked. It was the worst inaugural day performance for stocks in a century or so and underlined not only the challenges facing Obama, but also the limits of his power to tackle them.

The economy is in poor shape, and still getting worse. The earnings season is off to a horrendous start. No sector is immune from the carnage. Big industrial companies, technology companies, retailers and of course the financials are reporting disappointing results and their shares are for the most part getting slammed.

Every once in a while, a company pops out a profit gain or a solid forecast, and investors rush in to buy battered shares, only to reverse course and rush out again when the onslaught of bad news resumes.

Other things are not changing, too. John Thain's venality suggests strongly that stupidity and greed still reign on Wall Street. The appointment of a man who cannot decipher his tax obligations to head the Treasury department at a time when confidence in our leaders is at historic lows suggests the new administration has some blind spots of its own to examine.

The press, for its part, added yet another justification for public disdain by spending much of a presidential news conference this week whining about access to Obama's second swearing in, which happened at night at the White House. An audio recording and a photograph weren't enough disclosure, apparently.

Not that nothing changed. Obama ordered the closure of Guantanamo Bay's prison, banned torture and explicitly rejected the past eight years of government legal policy. He also tightened ethics rules. Whether these actions constitute good news may be up for debate, but there can be little discussion that Obama is heading in a different direction than his predecessor.

But that doesn't appear to have inspired much confidence in investors or consumers. Stocks ended lower for the week. The Dow Jones Industrial Average
dropped 45.24 points, or 0.6%,to close at 8,077.56 on the day, marking a 2.5% loss for the week. The Nasdaq Composite Index
rose 11.80 points, or 0.8%, to close at 1,477.29. For the week the index dropped 3.4%. The Standard & Poor's 500 Index
gained 4.45 points, or 0.5%, to close at 831.95. For the week the index was down 2.1%.

Stay tuned to MarketWatch over the weekend for all the news you need. Our weekend feature takes a look at the annual gathering in the Swiss alpine resort of Davos and what issues the opinion makers there will be grappling with.

The new era of Obama

Laying plain the challenges facing the U.S. but summoning a spirit of optimism, President Barack Obama called on Americans to take part in a "new era of responsibility" after being sworn in Tuesday as the 44th president. Obama, 47, becomes the first African-American to hold the highest office in the country, at a time of severe economic downturn -- a fact he took on directly in his 20-minute inaugural address. Find out more about the inauguration.

After the hype, awaiting the help

There's an old saw on Wall Street related to the overly optimistic: Hope is not an investment strategy. While crowds cheered President Obama's inauguration, stocks tanked in the worst reception for a new president since the Dow Jones Industrial Average
DJIA, -1.24%
was created more than a century ago. Now that the inaugural balls are over and the speeches have ceased, David Callaway believes it's time for Obama to begin inflicting some pain. Read David Callaway's column.

The future of the Treasury

Timothy Geithner's nomination to be Treasury secretary was approved by the Senate Finance Committee in an 18-5 vote on Thursday. The full Senate will now take up Geithner's nomination, probably not before next week. As part of his written responses to questions from the committee, Geithner said that banks getting money from the government's $700 billion bailout fund will have to explain in detail what they are doing with the money. Read more about what Geithner said.

Goodbye, John Thain

John Thain resigned from Bank of America
BAC
on Thursday after the giant lender lost confidence in Merrill Lynch's former chief executive. Bank of America Chief Executive Ken Lewis flew to New York to talk with Thain, and they mutually agreed "that the situation was not working out" and that he would resign, according to a spokesman for Bank of America. Find out what happened.

Battered banks

U.S. financial stocks plunged Tuesday, falling almost 17% to match their biggest percentage decline ever as investors panicked at the likelihood that there is no end in sight for the sector's need for capital, and no easy way to raise it. For investors who might have thought the worst was over after the nation's big three banks aired some dirty laundry last week, Tuesday provided clear evidence that the horror show continues, as well over half of the financial stocks in the bellwether S&P 500 Index lost more than 10% of their value. Read about the sector's decline.

Fiat takes stake in Chrysler

Italy's Fiat SpA (F), in an effort to help both sides navigate a historic downturn in the global auto industry, struck a deal for a 35% stake in struggling U.S. carmaker Chrysler in exchange for access to Fiat's overseas distribution network and smaller car technologies. Fiat will pay no cash for its stake or commit any funding in the future. Chrysler's majority owner, private-equity group Cerberus Capital Management, will see its 80% stake in the group diluted. Read more about the Chrysler deal.

Sweet taste of Apple

Apple Inc.
AAPL
defied expectations by reporting upbeat quarterly results fueled by strong sales of iPod media players. In a statement, Chief Executive Steve Jobs said that Apple was able to report a record $10 billion in quarterly revenue "even in these economically challenging times." Read more about Apple's results.

And then there's Microsoft

Microsoft Corp.
DJIA, -1.24%
rattled investors early Thursday by releasing a disappointing quarterly earnings report and announcing that it will lay off as many as 5,000 workers, a startling development for a company that has taken pride in avoiding such sweeping job cuts even during the lowest points of its roughly 33-year history. The software giant's second-quarter earnings reflected growing troubles from the slowing economy. Read more about Microsoft.

A slump at Nokia

Nokia Corp.
BAC, -2.27%
the world's largest maker of mobile phones, reported a 69% drop in fourth-quarter profit as demand for its handsets fell sharply during the key holiday season, particularly in China, and as it lost market share in the lucrative high-end segment. The European tech bellwether also lowered its dividend, slashed its 2009 forecast for global demand for phones and said it would cut roughly 1,000 jobs to keep a lid on expenses. Get more on the story.

Don't overstay your welcome

The market rout in 2008 has exposed the dangers of leveraged and leveraged inverse exchange-traded funds, designed to capture two or three times the movement in a particular stock index or provide 100% opposite results, as investors learned the hard way about the tax and performance distortions inherent in the funds. Find out more about the risks of these ETFs.

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